Alcoa Power Generating Inc. Yadkin Division PO Box 576 Badin, North Carolina 28009-0576 Tel: 1-888-886-1063 Fax: 1-704-422-5776 September 4, 2015 Secretary Kimberly D. Bose Federal Energy Regulatory Commission 888 First Street NE Washington, DC 20426 RE: Yadkin Hydroelectric Project (FERC No. 2197) Expedited Request for Temporary License Variance Dear Secretary Bose: Alcoa Power Generating Inc. (APGI), owner and operator of the Yadkin Project, No. P- 2197 (Project), respectfully requests expedited action by the Federal Energy Regulatory Commission (FERC or Commission) to approve a temporary variance from license requirements regarding (a) minimum flows downstream of the Project; and (b) reservoir draw down limits for the Project’s High Rock and Narrows Reservoirs. The reasons for this request are set forth below. Background APGI operates the Project under an annual license inasmuch as its application for a new license remains pending before the Commission. However, the project immediately downstream on the same watershed, the Yadkin – Pee Dee Project, No. P-2206, owned by Duke Energy Progress, Inc. (Duke Energy), received a new license by order of the Commission on April 1, 2015 (Order Issuing New License, 151 FERC P62,004). Included in the new Yadkin – Pee Dee Project license is a Low Inflow Protocol (LIP) that describes the procedures to be undertaken in the event that drought conditions occur on the watershed. APGI’s pending application for a new Yadkin Project license also contains an identical version of the LIP as Appendix A to the Relicensing Settlement Agreement submitted on May 7, 2007. However, because a new license has not been issued and APGI is operating under an annual license, its drought responsibilities are governed by a Drought Contingency Plan (DCP) approved in 2003.1 The LIP and APGI’s existing DCP are substantially similar. Both require collaborative stakeholder involvement and extensive communications. However, the LIP contains more detailed descriptions of specific steps and prescriptive actions, and somewhat different nomenclature. Having analyzed the differences, APGI believes that working within the LIP structure means that it is in compliance with the DCP, and so it has been 1 The Federal Energy Regulatory Commission (FERC or Commission) approved the DCP in an order dated April 23, 2003 (Accession No. 20030423-3003). voluntarily implementing the LIP with Duke Energy and the other stakeholders since mid-summer when the possibility of drought conditions became apparent. The Need for a Variance APGI has been monitoring actual and forecasted stream flow, precipitation, and ground water levels in the Yadkin Pee-Dee River Basin (Basin) since conditions began to worsen in the late spring. In accordance with the LIP, and because the US Drought Monitor of North Carolina (http://www.ncdrought.org/) classifies more than 10% of the Basin as D1- Moderate Drought, APGI met with the Drought Management Team (DMT2), and others via teleconference on July 2, 2015, August 6, 2015, and September 3, 2015. A summary of each teleconference is provided in Attachment 1. During the August 6, 2015 and September 3, 2015 teleconferences, the DMT discussed the possibility of implementing some interim operational changes at the Yadkin Project in response to worsening drought conditions in the Basin until such a time the LIP Stage is calculated as Stage 1. Among other things, the LIP requires operational changes at the Yadkin Project (e.g., a proportional drawdown of High Rock and Narrows reservoirs and a reduction in downstream flows from the Yadkin Project) when the LIP Stage is Stage 0 or higher. During recent discussions, many members of the DMT expressed concerns that the LIP is based on lagging indicators and is oftentimes reactive, rather than proactive. In part, this concern may reflect memory of the rapidity with which the onset of the 2002 drought reduced inflows on the watershed. In an effort to be more proactive and to mitigate worsening conditions, APGI proposed interim reductions in downstream flows from the Yadkin Project to the DMT in an email dated September 2, 2015 (Attachment 2). APGI also discussed the proposed reduction in downstream flows with the DMT during the September 3, 2015 teleconference. The following members of the DMT participated in the September 3, 2015 teleconference and indicated their support of APGI’s proposal: the North Carolina Department of Environment and Natural Resources (NCDENR), the North Carolina Wildlife Resources Commission (NCWRC), Duke Energy, the Uwharrie Point Community Association, the Badin Lake Association, and the Pee Dee River Coalition (represented by DOMTAR). APGI has requested that members of the DMT inform the Commission directly regarding their views with respect to this variance request. Accordingly, and with the DMT’s support, APGI respectfully requests a temporary variance from the minimum release requirements pursuant to Article 33 of its license from 1,400 cfs weekly average to 1,200 cfs weekly average and 900 cfs daily average in accordance with the following proposal, effective as soon as possible. (1) If the monthly LIP evaluation indicates Stage -1 and drought conditions appear to be more rapidly deteriorating, APGI will evaluate the LIP Stage 2 The members of the DMT are: APGI, Duke Energy, North Carolina Department of Environment and Natural Resources, South Carolina Department of Natural Resources, South Carolina Department of Health and Environmental Control, the U.S. Fish and Wildlife Service, and the High Rock Lake Association. 2 again mid-month (on the 15th). If the results of this mid-month evaluation indicate Stage 0, flows from the Yadkin Project will be reduced to 1,200 cfs weekly average. (2) Subsequently, if the next monthly LIP evaluation indicates Stage 0 and drought conditions appear to be more rapidly deteriorating, APGI will evaluate the LIP Stage again mid-month (on the 15th). If the results of this mid-month assessment indicate Stage 1, flows from the Yadkin Project will be reduced to 900 cfs daily average as described in the LIP. Additionally, because of the potential for outflows to exceed inflows by a substantial margin under these scenarios and the increasing need to use storage from the Project reservoirs, APGI is proposing a proportional drawdown of High Rock and Narrows reservoirs, in accordance with the LIP. Because the September 1, 2015 LIP evaluation indicates Stage -1 (Normal), APGI is not currently proposing any reductions to downstream flows. We will evaluate the LIP stage again on September 15, and, upon approval of this variance request, take action accordingly and inform the Commission of the action taken. APGI respectfully requests the Commission’s expedited approval of this variance request and will keep the Commission informed of further developments. Please contact me at (704) 422-5774 or [email protected] if you have any questions. Sincerely, Mark Gross VP Hydro Operations CC: Service List Project No. 2197 Thomas LoVullo, FERC Kelly Houff, FERC DMT Members Attachments: Attachment 1: July 2, 2015, August 6, 2015, and September 3, 2015 Teleconference Summaries Attachment 2: September 2, 2015 E-mail from Mark Gross, APGI Yadkin VP Hydro Operations, Proposing Reduction in Downstream Flows 3 CERTIFICATE OF SERVICE I hereby certify that I have this day served the foregoing document upon each person designated on the official service list in this proceeding in accordance with the requirements of Rule 2010 of the Commission’s Rules of Practice and Procedure. Dated at Badin, North Carolina this 4th day of September 2015. VP Hydro Operations APGI Yadkin Division P.O. Box 576 Badin, NC 28009 704-422-5774 4 Yadkin Project (FERC No. 2197) Drought Management Team Conference Call July 2, 2015 Participants: Amy Kohntopp, Alcoa Power Generating Inc. (APGI) Athena Strickland, Domtar and Pee Dee River Coalition Bill Brewer, City of Winston Salem Bob Stea, NC Division of Water Resources Chris Goudreau, NC Wildlife Resources Commission Deb Owen, NC Division of Water Resources George Galleher, Duke Energy Jody Smet, EA Engineering, Science and Technology (EA) John Ellis, US Fish and Wildlife Service Karen Baldwin, APGI Mark Gross, APGI Rich Schaeffer, Uwharrie Point Community Association Tami Styer, Duke Energy Tim Poole, APGI Because the U.S. Drought Monitor currently classifies a portion (> 10%) of the Yadkin‐Pee Dee River Basin as D1 “Moderate Drought” and in accordance with the Drought Contingency Plan (DCP) for the Yadkin Project (FERC No. 2197), Tim Poole, Chief Operator APGI, convened a call among interested parties on July 2, 2015, to consider actual and forecasted stream flow, precipitation, and ground water levels in the basin. Jody Smet, EA, explained that in addition to monitoring the US Drought Monitor of North Carolina at http://www.ncdrought.org/ APGI had also begun calculating the Low Inflow Protocol (LIP, Appendix A to the Yadkin Project Relicensing Settlement Agreement, February 2007) stage as of June 1 and July 1, 2015. The LIP stage for both the June 1 and July 1 calculations (shared with the DMT) show the LIP stage as ‐1, Normal. Tim Poole, APGI, provided an update on current conditions. He stated that average inflow into High Rock Reservoir in 2015 has been about 3,618 cfs. This inflow is considerably lower than the yearly averages in 2014 (5,500 cfs) and 2013 (6,300 cfs). As of the date of the call (July 2, 2015), inflow into High Rock, was 1,732 cfs and High Rock Reservoir was 2.9‐ft below full pool and Narrows was 1.4‐ft below full pool. Tim explained that in accordance with a Headwater Benefits Agreement (HBA) with Duke Energy, APGI is obligated to release 1,610 cfs weekly average from Narrows, and in June 2015, only 1,543 cfs was being released from High Rock. APGI was releasing 1,760 cfs out of Narrows to meet the HBA.